UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 28, 2005

 

Commission File Number   0-20214

 

BED BATH & BEYOND INC.

( Exact name of registrant as specified in its charter)

 

New York

 

11-2250488

( State of incorporation)

 

(I.R.S. Employer Identification No.)

 

650 Liberty Avenue, Union, New Jersey 07083

(Address of principal executive offices)                                (Zip code)

 

Registrant’s telephone number, including area code: (908) 688-0888

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days.

 

Yes  ý   No o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Securities Exchange Act).

 

 

Yes  ý   No o

 

Number of shares outstanding of the issuer’s Common Stock:

 

Class

 

Outstanding at May 28, 2005

Common Stock - $0.01 par value

 

295,737,578

 

 

 



 

BED BATH & BEYOND INC. AND SUBSIDIARIES

 

INDEX

 

PART I - FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

 

 

 

Consolidated Balance Sheets May 28, 2005 (unaudited) and February 26, 2005

 

 

 

Consolidated Statements of Earnings Three Months Ended May 28, 2005 (unaudited)  and May 29, 2004 (unaudited)

 

 

 

Consolidated Statements of Cash Flows Three Months Ended May 28, 2005 (unaudited) and May 29, 2004 (unaudited)

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

 

 

Item 4. Controls and Procedures

 

 

 

PART II - OTHER INFORMATION

 

 

 

Item 4. Submission of Matters to a Vote of Security Holders

 

 

 

Item 6. Exhibits

 

 

 

Signatures

 

 

 

Exhibit Index

 

 

 

Certifications

 

 

2



 

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except per share data)

 

 

 

May 28,
2005

 

February 26,
2005

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

224,528

 

$

222,108

 

Short term investment securities

 

651,983

 

629,339

 

Merchandise inventories

 

1,238,976

 

1,152,028

 

Other current assets

 

108,943

 

93,527

 

 

 

 

 

 

 

Total current assets

 

2,224,430

 

2,097,002

 

 

 

 

 

 

 

Long term investment securities

 

362,436

 

324,209

 

Property and equipment, net

 

616,315

 

609,631

 

Goodwill

 

147,559

 

147,559

 

Other assets

 

21,602

 

21,578

 

 

 

 

 

 

 

 

 

$

3,372,342

 

$

3,199,979

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

481,949

 

$

450,525

 

Accrued expenses and other current liabilities

 

255,429

 

254,643

 

Merchandise credit and gift card liabilities

 

92,660

 

87,061

 

Income taxes payable

 

89,955

 

81,364

 

 

 

 

 

 

 

Total current liabilities

 

919,993

 

873,593

 

 

 

 

 

 

 

Deferred rent and other liabilities

 

132,046

 

122,624

 

 

 

 

 

 

 

Total liabilities

 

1,052,039

 

996,217

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Preferred stock - $0.01 par value; authorized - 1,000 shares; no shares issued or outstanding

 

 

 

 

 

 

 

 

 

Common stock - $0.01 par value; authorized - 900,000 shares; issued 304,500 and 302,825 shares, respectively; outstanding 295,738 and 294,063 shares, respectively

 

3,045

 

3,028

 

Additional paid-in capital

 

541,842

 

491,508

 

Retained earnings

 

2,158,280

 

2,059,377

 

Deferred compensation

 

(32,713

)

 

Treasury stock, at cost; 8,762 shares

 

(350,151

)

(350,151

)

 

 

 

 

 

 

Total shareholders’ equity

 

2,320,303

 

2,203,762

 

 

 

 

 

 

 

 

 

$

3,372,342

 

$

3,199,979

 

 

See accompanying Notes to Consolidated Financial Statements.

 

3



 

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Statements of Earnings

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

 

May 28,
2005

 

May 29,
2004

 

 

 

 

 

 

 

Net sales

 

$

1,244,421

 

$

1,100,917

 

 

 

 

 

 

 

Cost of sales

 

723,640

 

644,143

 

 

 

 

 

 

 

Gross profit

 

520,781

 

456,774

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

369,897

 

328,067

 

 

 

 

 

 

 

Operating profit

 

150,884

 

128,707

 

 

 

 

 

 

 

Interest income

 

7,108

 

3,098

 

 

 

 

 

 

 

Earnings before provision for income taxes

 

157,992

 

131,805

 

 

 

 

 

 

 

Provision for income taxes

 

59,089

 

49,756

 

 

 

 

 

 

 

Net earnings

 

$

98,903

 

$

82,049

 

 

 

 

 

 

 

Net earnings per share - Basic

 

$

0.34

 

$

0.27

 

Net earnings per share - Diluted

 

$

0.33

 

$

0.27

 

 

 

 

 

 

 

Weighted average shares outstanding - Basic

 

294,413

 

300,417

 

Weighted average shares outstanding - Diluted

 

299,055

 

306,584

 

 

See accompanying Notes to Consolidated Financial Statements.

 

4



 

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands, unaudited)

 

 

 

Three Months Ended

 

 

 

May 28,
2005

 

May 29,
2004

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

98,903

 

$

82,049

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

25,760

 

22,427

 

Amortization

 

1,787

 

270

 

Tax benefit from exercise of stock options

 

7,873

 

2,707

 

Deferred income taxes

 

(325

)

535

 

Increase in assets:

 

 

 

 

 

Merchandise inventories

 

(86,948

)

(53,185

)

Other current assets

 

(13,847

)

(14,513

)

Other assets

 

(45

)

(30

)

Increase (decrease) in liabilities:

 

 

 

 

 

Accounts payable

 

31,424

 

29,644

 

Accrued expenses and other current liabilities

 

738

 

(17,646

)

Merchandise credit and gift card liabilities

 

5,599

 

4,627

 

Income taxes payable

 

8,591

 

(1,423

)

Deferred rent and other liabilities

 

8,130

 

4,640

 

 

 

 

 

 

 

Net cash provided by operating activities

 

87,640

 

60,102

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

Purchase of held-to-maturity investment securities

 

(102,736

)

(143,145

)

Redemption of held-to-maturity investment securities

 

10,715

 

50,000

 

Purchase of available-for-sale investment securities

 

(515,975

)

(530,102

)

Redemption of available-for-sale investment securities

 

546,300

 

547,965

 

Capital expenditures

 

(32,327

)

(22,618

)

 

 

 

 

 

 

Net cash used in investing activities

 

(94,023

)

(97,900

)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

8,803

 

4,018

 

 

 

 

 

 

 

Net cash provided by financing activities

 

8,803

 

4,018

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

2,420

 

(33,780

)

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

222,108

 

294,500

 

End of period

 

$

224,528

 

$

260,720

 

 

See accompanying Notes to Consolidated Financial Statements.

 

5



 

BED BATH & BEYOND INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

 

1) Basis of Presentation

 

The accompanying consolidated financial statements, except for the February 26, 2005 consolidated balance sheet, have been prepared without audit.  In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals and elimination of intercompany balances and transactions) necessary to present fairly the financial position of Bed Bath & Beyond Inc. and subsidiaries (the “Company”) as of May 28, 2005 and February 26, 2005 and the results of its operations and its cash flows for the three months ended May 28, 2005 and May 29, 2004, respectively.

 

The accompanying unaudited consolidated financial statements are presented in accordance with the requirements for Form 10-Q and consequently do not include all the disclosures normally required by U.S. generally accepted accounting principles.  Reference should be made to Bed Bath & Beyond Inc.’s Annual Report on Form 10-K for the fiscal year ended February 26, 2005 for additional disclosures, including a summary of the Company’s significant accounting policies.

 

The Company exhibits less seasonality than many other retail businesses, although sales levels are generally higher in August, November and December and generally lower in February and March.

 

Operating results of the Company on a quarterly basis may not be indicative of operating results for the full year.

 

Certain reclassifications have been made to the fiscal 2004 consolidated financial statements to conform to the fiscal 2005 consolidated financial statement presentation.

 

2) Recent Accounting Pronouncements

 

In March 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 47, “Accounting for Conditional Asset Retirement Obligations.”  FIN No. 47 clarifies the term “conditional asset retirement obligation” as used in FASB Statement No. 143, “Accounting for Asset Retirement Obligations.”  This interpretation requires companies to recognize a liability for the fair value of a legal obligation to perform asset-retirement activities that are conditional on a future event if the amount can be reasonably estimated.  FIN No. 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation.  FIN No. 47 is effective no later than the end of fiscal years ending after December 15, 2005. The Company does not believe that the adoption of FIN No. 47 will have a material impact on the Company’s consolidated financial statements.

 

In November 2004, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 151, “Inventory Costs, an Amendment of ARB No. 43, Chapter 4.”  SFAS No. 151 amends the guidance to clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials should be recognized as current period charges.  In addition, SFAS No. 151 requires that allocation of fixed production overhead to the costs of conversions be based on the

 

6



 

normal capacity of the production facilities.  The statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005.  The Company does not believe that the adoption of SFAS No. 151 will have a material impact on the Company’s consolidated financial statements.

 

3) Stock-Based Compensation

 

The FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123R”) which requires companies to measure all employee stock-based compensation awards using a fair value method and record such expense in its consolidated financial statements.  In addition, the adoption of SFAS No. 123R requires additional accounting and disclosure related to income tax and cash flow effects resulting from share-based payment arrangements. The SEC delayed the effective date of adoption for SFAS No. 123R to the beginning of the first annual reporting period after June 15, 2005.  Per SFAS No. 123R, early adoption is encouraged.

 

In anticipation of adopting SFAS 123R during its fiscal third quarter of 2005, the Company revised its overall approach to compensation for its employees, including stock-based compensation. As a result, awards consisting of a combination of restricted stock and stock options were granted to executive officers and other executives during the first quarter of 2005.  The restricted stock granted to these executives is subject to performance criteria as well as time based vesting.  Additionally, awards consisting solely of restricted stock were granted to the Company’s other employees who traditionally have received solely stock options.  The restricted stock granted to these employees is subject only to time based vesting.  All awards generally become exercisable in five equal annual installments beginning one to three years from the date of grant.

 

For the quarter ended May 28, 2005, the Company has elected not to adopt the fair value based method of accounting for its stock-based compensation plans, but continues to apply the provisions of Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” as permitted under SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of FASB Statement No.123.”  The Company has complied with the disclosure requirements of SFAS No. 148.

 

Accordingly, the Company currently does not recognize compensation expense for stock options.  The Company recognizes compensation expense for restricted stock awards over the service period.  Set forth below are the Company’s net earnings and net earnings per share “as reported,” and as if compensation expense had been recognized (“pro forma”) in accordance with the fair value provisions of SFAS No. 148:

 

7



 

 

 

Three Months Ended

 

(in thousands, except per share data)

 

May 28,
2005

 

May 29,
2004

 

Net earnings:

 

 

 

 

 

As reported

 

$

98,903

 

$

82,049

 

 

 

 

 

 

 

 

 

Deduct: Total stock-based employee compensation expense determined under fair value based method, net of related tax effects

 

(8,724

)

(8,309

)

Add: Total stock-based employee compensation expense included in net earnings, net of related tax effects

 

602

 

 

 

 

 

 

 

 

Pro forma

 

$

90,781

 

$

73,740

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

As reported

 

$

0.34

 

$

0.27

 

Pro forma

 

$

0.31

 

$

0.25

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

As reported

 

$

0.33

 

$

0.27

 

Pro forma

 

$

0.31

 

$

0.24

 

 

The Company currently plans to adopt SFAS No. 123R at the beginning of its fiscal third quarter under the modified prospective application.  Under this application, the Company will record compensation expense for all awards granted after the adoption date and for a portion of previously granted awards that remain outstanding at the date of adoption. The Company estimates the impact of recording stock-based compensation expense, which includes the expense of stock options in the third and fourth quarters and restricted stock awards from the date of grant, will be approximately $0.07 per share for fiscal 2005.

 

4) Earnings Per Share

 

The Company presents earnings per share on a basic and diluted basis.  Basic earnings per share has been computed by dividing net earnings by the weighted average number of shares outstanding.  Diluted earnings per share has been computed by dividing net earnings by the weighted average number of shares outstanding including the dilutive effect of stock-based awards.

 

Options for which the exercise price was greater than the average market price of common shares for the three months ended May 28, 2005 and May 29, 2004 were not included in the computation of diluted earnings per share as the effect would be anti-dilutive. These consisted of options totaling

 

8



 

approximately 4,641,000 and 2,693,000 shares for the three months ended May 28, 2005 and May 29, 2004, respectively.

 

5) Supplemental Cash Flow Information

 

The Company paid income taxes of $45.2 million and $47.9 million in the first three months of fiscal 2005 and 2004, respectively.

 

9



 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Overview

 

Bed Bath & Beyond Inc. and subsidiaries (the “Company”) operate specialty retail stores nationwide, including stores of Bed Bath & Beyond (“BBB”), Harmon Stores, Inc. (“Harmon”) and Christmas Tree Shops, Inc. (“CTS”), primarily selling better quality domestics merchandise and home furnishings. The Company’s objective is to be a customer’s first choice for products and services in the categories offered, in the markets in which the Company operates.

 

The Company’s strategy is to achieve this objective through excellent customer service, an extensive breadth and depth of assortment, everyday low prices, introduction of new merchandising offerings and development of our infrastructure.

 

Operating in the highly competitive retail industry, the Company, along with other retail companies, is influenced by a number of factors including but not limited to, general economic conditions, consumer preferences and spending habits, competition from existing and potential competitors, unusual weather patterns and the ability to find suitable locations at acceptable occupancy costs to support the Company’s expansion program.

 

For the three months ended May 28, 2005, the Company’s consolidated net sales increased by 13.0% as compared to the corresponding quarter last year.  The increase in net sales was primarily attributable to the continuing BBB store expansion program and an increase in comparable store sales of approximately 4.4% as compared with an increase of approximately 5.1% for the fiscal first quarter of 2004.  The increase in comparable store sales reflected a number of factors, including but not limited to, the continued consumer acceptance of the Company’s merchandise offerings and a strong focus on customer service with an emphasis on responding to customer feedback.

 

A store is considered a comparable store when it has been open for twelve full months following its grand opening period (typically four to six weeks).  Stores relocated or expanded are excluded from comparable store sales if the change in square footage would cause meaningful disparity in sales over the prior period.  In the case of a store to be closed, such store’s sales are not considered comparable once the store closing process has commenced.

 

For the three months ended May 28, 2005, the Company’s consolidated net earnings increased by 20.5% as compared to the corresponding quarter last year.  This increase was primarily a result of a relative increase in gross profit as a percentage of net sales and a relative decrease in selling, general and administrative expenses (“SG&A”) as a percentage of net sales.

 

10



 

Results of Operations

 

Net Sales

 

Net sales for the three months ended May 28, 2005 were approximately $1.244 billion, an increase of $143.5 million or approximately 13.0% over net sales of approximately $1.101 billion for the corresponding quarter last year.

 

Approximately 66.6% of the increase in net sales for the three months ended May 28, 2005 was attributable to an increase in the Company’s new store sales with the balance of the increase primarily attributable to the increase in comparable store sales.  The increase in comparable store sales for the first quarter of 2005 was 4.4% as compared to 5.1% for the first quarter of 2004.  As of the beginning of the fiscal third quarter of 2004, CTS is included in the calculation of comparable store sales. The increase in comparable store sales was due to a number of factors, including but not limited to, the continued consumer acceptance of the Company’s merchandise offerings and a strong focus on customer service with an emphasis on responding to customer feedback.

 

Sales of domestics merchandise accounted for approximately 48% and 50% of net sales for the three months ended May 28, 2005 and May 29, 2004, respectively.  Sales of home furnishings accounted for approximately 52% and 50% of net sales for the three months ended May 28, 2005 and May 29, 2004, respectively.

 

Gross Profit

 

Gross profit for the three months ended May 28, 2005 was $520.8 million or 41.8% of net sales, compared with $456.8 million or 41.5% of net sales for the three months ended May 29, 2004.  The increase in gross profit as a percentage of net sales was driven primarily by the reduction of inventory acquisition costs attributable to the Company’s current merchandise offerings.

 

Selling, General and Administrative Expenses

 

SG&A was $369.9 million in the first quarter of 2005, compared with $328.1 million in the corresponding quarter last year and as a percentage of net sales was 29.7% and 29.8%, respectively.  The decrease in SG&A as a percentage of net sales was primarily attributable to an improvement in payroll and payroll related items as a percentage of net sales which primarily resulted from increases in store sales.

 

Operating Profit

 

Operating profit for the three months ended May 28, 2005 increased to $150.9 million, compared to $128.7 million during the comparable period in 2004.  The improvement in operating profit was a result of the increase in net sales, a relative increase in gross profit as a percentage of net sales and a relative decrease in SG&A as a percentage of net sales, as discussed above.

 

Interest Income

 

Interest income was $7.1 million for the first quarter of 2005, compared to $3.1 million for the

 

11



 

corresponding quarter last year.  Interest income increased due to an increase in invested cash and an increase in the Company’s average investment interest rate as a result of the recent upward trend in short term interest rates.

 

Income Taxes

 

The effective tax rate was 37.40% for the fiscal three month period of 2005 and 37.75% for the fiscal three month period of 2004.  The decrease is due to a reduction in the weighted average effective tax rate resulting from a change in the mix of the business within the taxable jurisdictions in which the Company operates.

 

Net Earnings

 

As a result of the factors described above, net earnings increased to $98.9 million for the first quarter of 2005, compared with $82.0 million for the first quarter of 2004.

 

Expansion Program

 

The Company is engaged in an ongoing expansion program involving the opening of new stores in both new and existing markets and the expansion or relocation of existing stores. As a result of this program, the Company operated 671 BBB stores, 26 CTS stores and 35 Harmon stores at the end of the fiscal first quarter of 2005, compared with 592 BBB stores, 24 CTS stores and 31 Harmon stores at the end of the corresponding quarter last year.  At May 28, 2005, Company-wide total square footage was approximately 23.2 million square feet.

 

The Company opened 11 BBB stores during the first quarter of fiscal 2005.  The Company plans to open approximately 74 additional BBB stores, in both new and existing markets, and several CTS and Harmon stores by the end of the fiscal year.

 

Liquidity and Capital Resources

 

Net cash provided by operating activities for the three months ended May 28, 2005 was $87.6 million as compared with $60.1 million in the corresponding period of fiscal 2004.  The increase in net cash provided by operating activities was primarily attributable to an increase in net income, the timing of certain liability payments, an increase in income taxes payable and an increase in the tax benefit received from the exercise of stock options, partially offset by an increase in merchandise inventories (primarily a result of new store space).

 

Inventory per square foot was $53.29 as of May 28, 2005 and $50.96 as of May 29, 2004.  The Company continues to focus on optimizing inventory productivity while maintaining appropriate in-store merchandise levels to support sales growth.

 

Net cash used in investing activities for the three months ended May 28, 2005 was $94.0 million as compared with $97.9 million in the corresponding period of fiscal 2004.  The decrease in net cash used in investing activities was attributable to a decrease in purchases of investment securities partially offset by a decrease in redemptions of investment securities and an increase in capital expenditures.  The increase in capital expenditures was primarily attributable to expenditures for

 

12



 

furniture, fixtures and leasehold improvements for the 11 new stores opened and stores under construction during the first three months of fiscal 2005, a warehouse facility expansion and information technology enhancements, compared to expenditures for furniture, fixtures and leasehold improvements for the 17 new stores opened and stores under construction in the corresponding period last year.

 

Net cash provided by financing activities for the three months ended May 28, 2005 was $8.8 million as compared with $4.0 million in the corresponding period of 2004.  The increase in net cash provided by financing activities is attributable to an increase in proceeds from the exercise of stock options in the current year.

 

For fiscal 2005, the Company believes that its current operating cash flow, working capital, and cash and cash equivalents on hand should be sufficient to meet its obligations in the ordinary course of business, including capital expenditures and new store openings.

 

Seasonality

 

The Company exhibits less seasonality than many other retail businesses, although sales levels are generally higher in August, November and December and generally lower in February and March.

 

Recent Accounting Pronouncements

 

The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123R”) which requires companies to measure all employee stock-based compensation awards using a fair value method and record such expense in its consolidated financial statements.  In addition, the adoption of SFAS No. 123R requires additional accounting and disclosure related to income tax and cash flow effects resulting from share-based payment arrangements. The SEC delayed the effective date of adoption for SFAS No. 123R to the beginning of the first annual reporting period after June 15, 2005.  Per SFAS No. 123R, early adoption is encouraged.

 

The Company currently plans to adopt SFAS No. 123R at the beginning of its fiscal third quarter under the modified prospective application.  Under this application, the Company will record compensation expense for all awards granted after the adoption date and for a portion of previously granted awards that remain outstanding at the date of adoption. The Company estimates the impact of recording stock-based compensation expense, which includes the expense of stock options in the third and fourth quarters and restricted stock awards from the date of grant, will be approximately $0.07 per share for fiscal 2005.

 

Critical Accounting Policies

 

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires the Company to establish accounting policies and to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on other assumptions that it believes to be relevant under the circumstances, the

 

13



 

results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. In particular, judgment is used in areas such as the inventory valuation, impairment of long-lived assets, goodwill and other indefinitely lived intangible assets, income taxes and accruals for self insurance, litigation and store opening, expansion, relocation and closing costs. Actual results could differ from these estimates.

 

Inventory Valuation :  Merchandise inventories are stated at the lower of cost or market.  Inventory costs for BBB and Harmon are calculated using the retail inventory method and inventory cost for CTS is calculated using the first-in, first-out cost method.  Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail value of inventories.

 

At any one time, inventories include items that have been written down to the Company’s best estimate of their realizable value.  Factors considered in estimating realizable value include the age of merchandise and anticipated demand.  Actual realizable value could differ materially from this estimate based upon future customer demand or economic conditions.

 

The Company estimates its reserve for shrinkage throughout the year, based on historical shrinkage.  Actual shrinkage is recorded at year-end based upon the results of the Company’s physical inventory count.  Historically, the Company’s shrinkage has not been volatile.

 

Impairment of Long-Lived Assets :  The Company reviews long-lived assets for impairment annually or when events or changes in circumstances indicate the carrying value of these assets may exceed their current fair values.  If it is determined that an impairment loss has occurred, the loss would be recognized during that period.  The impairment loss is calculated as the difference between asset carrying values and the estimated future undiscounted cash flows.  The Company has not historically had any material impairment of long-lived assets.  In the future, if events or market conditions affect the estimated cash flows generated by the Company’s long-lived assets to the extent that an asset is impaired, the Company will adjust the carrying value of these assets in the period in which the impairment occurs.

 

Goodwill and Other Indefinitely Lived Intangible Assets :  The Company reviews goodwill and other intangibles that have indefinite lives for impairment annually or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values.  Impairment testing is based upon the best information available including estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value.  The Company has not historically recorded an impairment to its goodwill and other indefinitely lived intangible assets.  In the future, if events or market conditions affect the estimated fair value to the extent that an asset is impaired, the Company will adjust the carrying value of these assets in the period in which the impairment occurs.

 

Income Taxes : The Company accounts for its income taxes using the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled.  The effect on

 

14



 

deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date.

 

Judgment is required in determining the provision for income taxes and related accruals, deferred tax assets and liabilities.  In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain.  Additionally, the Company’s tax returns are subject to audit by various tax authorities.  Although the Company believes that its estimates are reasonable, actual results could differ from these estimates.

 

Self Insurance :  The Company utilizes a combination of insurance and self insurance for a number of risks including workers compensation, general liability, automobile liability and employee related health care benefits (a portion of which is paid by its employees). Liabilities associated with the risks that the Company retains are estimated by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions.  Although the Company’s claims experience has not displayed substantial volatility in the past, actual experience could materially vary from its historical experience in the future.  Factors that affect these estimates include but are not limited to: inflation, the number and severity of claims and regulatory changes.  In the future, if the Company concludes an adjustment to self insurance accruals is required, the liability will be adjusted accordingly.

 

Litigation :  The Company records an estimated liability related to various claims and legal actions arising in the ordinary course of business which is based on available information and advice from outside counsel, where appropriate.  As additional information becomes available, the Company reassesses the potential liability related to its pending litigation and revises its estimates as appropriate. The Company cannot predict the nature and validity of claims which could be asserted in the future, and future claims could have a material impact on its earnings.

 

Store Opening, Expansion, Relocation and Closing Costs :  Store opening, expansion, relocation and closing costs, including estimates for markdowns, asset residual values and projected occupancy costs, are charged to earnings as incurred.  Actual costs related to store relocations and closings could differ from these estimates.

 

Forward Looking Statements

 

This Form 10-Q may contain forward looking statements.  Many of these forward looking statements can be identified by use of words such as may, will, expect, anticipate, estimate, assume, continue, project, plan, and similar words and phrases.  The Company’s actual results and future financial condition may differ materially from those expressed in any such forward looking statements as a result of many factors that may be outside the Company’s control.  Such factors include, without limitation: general economic conditions, changes in the retailing environment and consumer preferences and spending habits; demographics and other macroeconomic factors that may impact the level of spending for the types of merchandise sold by the Company; unusual weather patterns; competition from existing and potential competitors; competition from other channels of distribution; pricing pressures; the ability to find suitable locations at acceptable occupancy costs to support the Company’s expansion program; and the cost of labor, merchandise and other costs and expenses. The Company does not undertake any obligation to update its forward looking statements.

 

15



 

Available Information

 

The Company makes available as soon as reasonably practicable after filing with the SEC, free of charge, through the Investor Relations section of its website, www.bedbathandbeyond.com, the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, electronically filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

 

16



 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s investment securities.  The Company’s market risks at May 28, 2005 are similar to those disclosed in Item 7a of the Company’s Form 10-K for the year ended February 26, 2005.  The Company continues to regularly evaluate these risks and continues to take measures to mitigate these risks.

 

Item 4.  Controls and Procedures

 

(a)                 Evaluation of disclosure controls and procedures.  The Company’s Principal Executive Officer and Principal Financial Officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-15(e) and 15d-15(e)) as of May 28, 2005 (the end of the period covered by this quarterly report on Form 10-Q). Based on that evaluation, the Principal Executive Officer and the Principal Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective, providing them with material information relating to the Company as required to be disclosed in the reports the Company files or submits under the Exchange Act on a timely basis.

 

(b)                Changes in internal controls.   There were no changes in the Company’s internal controls over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

17



 

PART II - OTHER INFORMATION

 

Item 4.  Submission of Matters to a Vote of Security Holders

 

The Company’s Annual Meeting was held on June 30, 2005.  At the Annual Meeting, the following items were voted upon:

 

1.                            Election of four directors of the Corporation.

 

2.                            Ratification of the appointment of KPMG LLP as independent auditors for the fiscal year ending February 25, 2006.

 

3.                            Three shareholder proposals.

 

The results of the voting were as follows:

 

 

 

SHARES VOTED (in thousands)

 

 

 

 

 

 

 

Description

 

 

 

For

 

Withheld

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Election of the Board of Directors:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leonard Feinstein

 

 

 

239,411

 

19,750

 

 

 

Robert Kaplan

 

 

 

240,958

 

18,203

 

 

 

Dean S. Adler

 

 

 

244,824

 

14,337

 

 

 

Jordan Heller

 

 

 

244,829

 

14,332

 

 

 

 

 

 

For

 

Against

 

Abstentions

 

 

 

2. Appointment of Auditors:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KPMG

 

250,358

 

7,132

 

1,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For

 

Against

 

Abstentions

 

Broker
Non-Votes

 

 

 

 

 

 

 

 

 

 

 

3. Shareholder Proposal; Foreign Workplace Monitoring:

 

41,021

 

148,689

 

33,853

 

35,598

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For

 

Against

 

Abstentions

 

Broker
Non-Votes

 

 

 

 

 

 

 

 

 

 

 

4. Shareholder Proposal; Executive Stock Holdings:

 

55,391

 

154,813

 

13,350

 

35,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For

 

Against

 

Abstentions

 

Broker
Non-Votes

 

 

 

 

 

 

 

 

 

 

 

5. Shareholder Proposal; Board Structure:

 

149,527

 

71,962

 

2,061

 

35,611

 

 

 

 

 

 

 

 

 

 

 

 

18



 

Item 6.  Exhibits

 

The exhibits to this Report are listed in the Exhibit Index included elsewhere herein.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

BED BATH & BEYOND INC.

 

 

(Registrant)

 

 

 

 

 

 

 

Date: July 6, 2005

 

 

By:

   /s/ Eugene A. Castagna

 

 

 

 

 

Eugene A. Castagna

 

 

 

 

Vice President – Finance and

 

 

 

 

Principal Accounting Officer

 

19



 

EXHIBIT INDEX

 

Exhibit No.

 

Exhibit

 

 

 

 

 

10.1

 

Form of Restricted Stock Agreement under 2004 Stock Incentive Plan.

 

 

 

 

 

10.2

 

Performance-Based Form of Restricted Stock Agreement under 2004 Stock Incentive Plan.

 

 

 

 

 

31.1

 

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.

 

 

 

 

 

31.2

 

Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.

 

 

 

 

 

32

 

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.

 

 

20


Exhibit 10.1

 

This RESTRICTED STOCK AGREEMENT is entered into as of _______________, 20___, between BED BATH & BEYOND INC. (the “ Company ”) and _________________ ( you” ).

 

1.      Restricted Stock Grant .  Subject to the restrictions, terms and conditions of the Plan and this Agreement, the Company hereby awards you the number of shares of Common Stock specified in paragraph 7 below.  The shares are subject to certain restrictions as set forth in the Plan and this Agreement.  Until vested, the shares are referred to herein as Restricted Stock .”

 

2.      The Plan .   The Restricted Stock is entirely subject to the terms of the Company’s 2004 Incentive Compensation Plan (the Plan ).  A description of key terms of the Plan is set forth in the Prospectus for the Plan.  Capitalized terms used but not defined in this Agreement have the meanings set forth in the Plan.

 

3.      Restrictions on Transfer .  You will not sell, transfer, pledge, hypothecate, assign or otherwise dispose of (any such action, a Transfer ) the Restricted Stock, except as set forth in the Plan or this Agreement.  Any attempted Transfer in violation of the Plan or this Agreement will be void and of no effect.

 

4.      Forfeiture .  Upon your Termination, all unvested Restricted Stock shall immediately be forfeited without compensation.

 

5.      Retention of Certificates .  Promptly after the date first written above (the Grant Date ), the Company will recognize your ownership of the Restricted Stock through uncertificated book entry, another similar method, or issuance of stock certificates representing the Restricted Stock.  Any stock certificates will be registered in your name, bear any legend that the Committee deems appropriate to reflect any restrictions on Transfer, and be held in custody by the Company or its designated agent until the Restricted Stock vests.  If requested by the Company, you will deliver to the Company a duly signed stock power, endorsed in blank, relating to the Restricted Stock.  If you receive a dividend (whether in cash or stock) on the Restricted Stock, the Restricted Stock shares are split, or you receive other shares, securities, monies, warrants, rights, options or property representing a dividend or distribution in respect of the Restricted Stock, you will immediately deposit with the Company, or the Company will retain, any such rights or property (including cash or any certificates representing shares duly endorsed in blank or accompanied by stock powers duly endorsed in blank), which shall be subject to the same restrictions as the Restricted Stock and be encompassed within the term Restricted Stock as used herein.

 

6.      Rights with Regard to Restricted Stock .  On and after the Grant Date, you will have the right to vote the Restricted Stock and to exercise all other rights, powers and privileges of a holder of Common Stock with respect to the Restricted Stock set forth in the Plan, except:  (i) you will not be entitled to delivery of any unvested Restricted Stock, and the Company (or its designated agent) will retain custody of any such shares; (ii) no part of the Restricted Stock will bear interest or be segregated in separate accounts; and (iii) you may not Transfer any unvested Restricted Stock.

 

7.      Grant Size; Vesting Schedule .  Restricted Stock covered by this Award: _______________ shares (representing $___________, valued at the Grant Date).

 

1



 

The Restricted Stock will become vested and cease to be Restricted Stock (but will remain subject to the terms of the Plan) as follows unless you experience a Termination before the applicable Vesting Date:

 

Vesting Date

 

Percent
Vested

 

Later of (x) [3rd] anniversary of Grant Date and (y) if such anniversary falls within a scheduled blackout period to which you are subject (“ SBP ”), the date of expiration of the SBP (“ DESBP ”)

 

[20%

 

Later of (x) [4th] anniversary of Grant Date and (y) DESBP

 

20%

 

Later of (x) [5th] anniversary of Grant Date and (y) DESBP

 

20%

 

Later of (x) [6th] anniversary of Grant Date and (y) DESBP

 

20%

 

Later of (x) [7th] anniversary of Grant Date and (y) DESBP

 

20%]

 

 

Fractional shares shall not vest but shall instead be accumulated for vesting as whole shares in accordance with Company policy, with full vesting scheduled to occur no later than the final Vesting Date.  All unscheduled blackout periods (each, a “ UBP ”) and SBPs are determined by the Company.  If a Vesting Date occurs during a UBP to which you are subject, (i) you will vest in the applicable shares on the applicable Vesting Date, with the number of shares to which you become entitled on such vesting subject to reduction by the Company, at its option, to cover the applicable minimum statutorily required withholding obligation, but (ii) you will be unable to sell your shares (net of any shares withheld at the Company’s option to pay minimum required taxes) until the later of (x) the expiration of the UBP, or (y) in the event the expiration of the UBP falls within a SBP, the immediately following DESBP.

 

All vesting will occur only on the appropriate Vesting Dates, with no proportionate or partial vesting in the period prior to any such date.  Except as otherwise provided in the preceding paragraph, when any Restricted Stock becomes vested, the Company (unless it determines a delay is required under applicable law or rules) will promptly issue and deliver to you a stock certificate registered in your name or will promptly recognize ownership of your shares through uncertificated book entry or another similar method, subject to applicable federal, state and local tax withholding in a manner acceptable to the Committee.  You will be permitted to transfer shares of Restricted Stock following the expiration of the Restriction Period, but only to the extent permitted by applicable law.

 

8.      Notice .  Any notice or communication to the Company concerning the Restricted Stock must be in writing and delivered in person, or by U.S. mail, to the following address (or another address specified by the Company): Bed Bath & Beyond Inc., Finance Department – Stock Administration, 650 Liberty Avenue, Union, New Jersey  07083 .   In accordance with the Plan, you must deliver an executed copy of this Agreement to the Company.

 

BED BATH & BEYOND INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

An Authorized Officer

 

Restricted Stock Recipient (You)

 

2


Exhibit 10.2

 

This RESTRICTED STOCK AGREEMENT is entered into as of ________________, 20___ (the “Grant Date” ), between BED BATH & BEYOND INC. (the “Company” ) and ________________ ( “you” ).

 

1.      Restricted Stock Grant .  Subject to the restrictions, terms and conditions of the Plan and this Agreement, the Company hereby awards you the number of shares of Common Stock specified in paragraph 7 below.  The shares are subject to certain restrictions as set forth in the Plan and this Agreement.  Until vested, the shares are referred to herein as Restricted Stock .”

 

2.      The Plan .   The Restricted Stock is entirely subject to the terms of the Company’s 2004 Incentive Compensation Plan (the Plan ).  A description of key terms of the Plan is set forth in the Prospectus for the Plan.  Capitalized terms used but not defined in this Agreement have the meanings set forth in the Plan.

 

3.      Restrictions on Transfer .  You will not sell, transfer, pledge, hypothecate, assign or otherwise dispose of (any such action, a Transfer ) the Restricted Stock, except as set forth in the Plan or this Agreement.  Any attempted Transfer in violation of the Plan or this Agreement will be void and of no effect.

 

4.      Forfeiture .  Upon your Termination or the failure to attain the performance goal discussed in paragraph 7 below, all unvested Restricted Stock shall immediately be forfeited without compensation.  Notwithstanding the foregoing, the Restricted Stock will vest in full upon a Termination by reason of your death or Disability, by the Company without Cause or, if provided in an agreement between you and the Company in effect as of the Grant Date, by you for Good Reason or due to a Constructive Termination without Cause, as each such term (or concept of like import) is defined in that agreement, but only, in each case, if such event occurs (i) before the Committee has determined whether or not the performance goal described in paragraph 7 has been attained, or (ii) after attainment of the performance goal.  If you have been granted Company stock options that are subject to accelerated vesting upon a “Change in Control” as defined in an employment agreement between you and the Company in effect as of the Grant Date, your Restricted Stock will also vest in full upon a Change in Control (as defined in that agreement).

 

5.      Retention of Certificates .  Promptly after the Grant Date, the Company will recognize your ownership of the Restricted Stock through uncertificated book entry, another similar method, or issuance of stock certificates representing the Restricted Stock.  Any stock certificates will be registered in your name, bear any legend that the Committee deems appropriate to reflect any restrictions on Transfer, and be held in custody by the Company or its designated agent until the Restricted Stock vests.  If requested by the Company, you will deliver to the Company a duly signed stock power, endorsed in blank, relating to the Restricted Stock.  If you receive a dividend (whether in cash or stock) on the Restricted Stock, the Restricted Stock shares are split, or you receive other shares, securities, monies, warrants, rights, options or property representing a dividend or distribution in respect of the Restricted Stock, you will immediately deposit with the Company, or the Company will retain, any such rights or property (including cash or any certificates representing shares duly endorsed in blank or accompanied by stock powers duly endorsed in blank), which shall be subject to the same restrictions as the Restricted Stock and be encompassed within the term

 

1



 

Restricted Stock as used herein.

 

6.      Rights with Regard to Restricted Stock .  On and after the Grant Date, you will have the right to vote the Restricted Stock and to exercise all other rights, powers and privileges of a holder of Common Stock with respect to the Restricted Stock set forth in the Plan, except:  (i) you will not be entitled to delivery of any unvested Restricted Stock, and the Company (or its designated agent) will retain custody of any such shares; (ii) no part of the Restricted Stock will bear interest or be segregated in separate accounts; and (iii) you may not Transfer any unvested Restricted Stock.

 

7.      Grant Size; Vesting Schedule; Performance Goal .  Restricted Stock covered by this Award:  _________________ shares (representing $___________, valued at the Grant Date).  The performance goal applicable to the Restricted Stock has been set forth in a resolution by an appropriate Board-level committee and separately communicated to you.  Except as otherwise provided in paragraph 4 above, your vesting in any portion of the Restricted Stock is contingent on attainment of the performance goal before the first Vesting Date (and, if required under Section 162(m) of the Code, on subsequent certification of that attainment by the Committee).  In the event the performance goal is not attained during the time period described above, all of the Restricted Stock shall be forfeited without compensation.  Subject to the attainment of the performance goal (and, if required, the subsequent certification described above), the vesting schedule applicable to the Restricted Stock is as follows:

 

Vesting Date

 

Percent
Vested

 

Later of (x) [3rd] anniversary of Grant Date and (y) if such anniversary falls within a scheduled blackout period to which you are subject (“ SBP ”), the date of expiration of the SBP (“ DESBP ”)

 

[20%

 

Later of (x) [4th] anniversary of Grant Date and (y) DESBP

 

20%

 

Later of (x) [5th] anniversary of Grant Date and (y) DESBP

 

20%

 

Later of (x) [6th] anniversary of Grant Date and (y) DESBP

 

20%

 

Later of (x) [7th] anniversary of Grant Date and (y) DESBP

 

20%]

 

 

Restricted Stock that vests will cease to be Restricted Stock (but will remain subject to the terms of the Plan).  The number of shares to which you become entitled on vesting shall be subject to reduction by the Company, at its option, to cover the applicable minimum statutorily required withholding obligation.  Fractional shares shall not vest but shall instead be accumulated for vesting as whole shares in accordance with Company policy, with full vesting scheduled to occur no later than the final Vesting Date.  All unscheduled blackout periods (each, a “UBP”) and SBPs are determined by the Company.  If a Vesting Date occurs during a UBP to which you are subject, (i) you will vest in the applicable shares on the applicable Vesting Date, but (ii) you will be unable to sell your shares (net of any shares withheld at the Company’s option to pay minimum required taxes) until the later of (x) the expiration of the UBP, or (y) in the event the expiration of the UBP falls within a SBP, the immediately following DESBP.

 

All vesting will occur only on the appropriate Vesting Dates, with no proportionate or partial vesting in the period prior to any such date.  Except as otherwise provided in the preceding paragraph, when any Restricted Stock becomes vested, the Company (unless it determines a delay is required under applicable law or rules) will promptly issue and deliver to you a stock certificate registered in your

 

2



 

name or will promptly recognize ownership of your shares through uncertificated book entry or another similar method, subject to applicable federal, state and local tax withholding in a manner acceptable to the Committee.  You will be permitted to transfer shares of Restricted Stock following the expiration of the Restriction Period, but only to the extent permitted by applicable law.

 

8.      Notice .  Any notice or communication to the Company concerning the Restricted Stock must be in writing and delivered in person, or by U.S. mail, to the following address (or another address specified by the Company): Bed Bath & Beyond Inc., Finance Department – Stock Administration, 650 Liberty Avenue, Union, New Jersey  07083 .   In accordance with the Plan, you must deliver an executed copy of this Agreement to the Company.

 

BED BATH & BEYOND INC.

 

 

 

 

 

By:

 

 

 

 

 

An Authorized Officer

 

Restricted Stock Recipient (You)

 

3


Exhibit 31.1

 

CERTIFICATION

 

I, Steven H. Temares, Principal Executive Officer, certify that:

 

1.                I have reviewed this quarterly report on Form 10-Q of Bed Bath & Beyond Inc.;

 

2.                Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.                Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.                The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.                Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.               Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.                Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.               Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

1



 

5.                The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.                All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.               Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: July 6, 2005

 

/s/ Steven H. Temares

 

 

 

Steven H. Temares

 

 

President and Chief Executive
Officer

 

2


Exhibit 31.2

 

CERTIFICATION

 

I, Eugene A. Castagna, Principal Financial Officer, certify that:

 

1.                                        I have reviewed this quarterly report on Form 10-Q of Bed Bath & Beyond Inc.;

 

2.                                        Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.                                        Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.                                        The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.                Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.               Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.                Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.               Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

1



 

5.                                        The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.                All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.               Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: July 6, 2005

 

/s/ Eugene A. Castagna

 

 

 

Eugene A. Castagna

 

 

Vice President – Finance and

 

 

Assistant Treasurer

 

2


Exhibit 32

 

CERTIFICATION

 

The undersigned, the Principal Executive Officer and Principal Financial Officer of Bed Bath & Beyond Inc. (the “Company”), hereby certify, to the best of their knowledge and belief, that the Form 10-Q of the Company for the quarterly period ended May 28, 2005, (the “Periodic Report”) accompanying this certification fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.  The foregoing certification is provided solely for purposes of complying with the provisions of Section 906 of the Sarbanes – Oxley Act of 2002 and is not intended to be used for any other purposes.

 

 

Date: July 6, 2005

 

/s/ Steven H. Temares

 

 

 

Steven H. Temares

 

 

President and Chief Executive
Officer

 

 

 

 

 

 

 

 

/s/ Eugene A. Castagna

 

 

 

Eugene A. Castagna

 

 

Vice President – Finance and
Assistant Treasurer

 

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